In Verve Wireless, Founders Create a Mobile Technology Platform and a Lifeline for Local News
The New York Times has a pretty impressive website for mobile apps, with plenty of information to help its loyal readers access news on their iPhone, BlackBerry, Palm Pre, Android, and other mobile devices. As the premiere national newspaper, though, the Times also has more wherewithal than most local newspapers and broadcasters to develop customized apps for mobile devices.
So what about the rest of the media industry?
Enter Verve Wireless. The Encinitas, CA-based startup, which has been keeping a low profile, has developed a technology platform that enables a range of newspapers and other media companies to publish their content and serve ads across a host of mobile devices. The company also offers different templates so its media customers can choose how their content will be displayed and development tools that allows each media customer to create their own brand identity on Verve’s software as a service.
When Art Howe and Tom Kenney started Verve in early 2005, they saw a great opportunity to develop technology that both large and small media companies could use to serve local news and advertising to mobile devices. They also had the benefit of approaching the idea from different perspectives.
Kenney had spent the previous eight years working for Nokia Venture Partners, the Finnish telecommunications giant’s venture capital fund, which is now known as BlueRun Ventures of Menlo Park, CA. Kenney, who had been overseeing Nokia’s investments in mobile Internet technologies, says he began to see that local news and other content would be especially valuable in mobile communications. “I was just seeing how local advertisers followed consumers—and the consumers followed local content,” Kenney says.
Yet, Kenney recalls, “We talked with a lot of newspaper publishers about mobile, and asked when they thought it was going to be important, and what they thought was going to be important about the mobile market. It became very clear, very quickly, that they were not going to develop products to get into that market themselves. So we literally had to build the system ourselves to allow our partners to get into the mobile market.”
Kenney says he sought out Howe with the idea of asking him to be an advisor. They hit it off so well, they decided to join forces instead. Howe, who has owned and operated some 50 newspapers, including The Village Voice, says, “We both shared a vision that mobile would play a huge role in local media. It’s kind of made for local media.”
Howe has been blessed by the publishing business. He worked in the last half of the 1970s as a reporter at mid-size daily and big city newspapers. He won the Pulitzer Prize for national reporting at the Philadelphia Inquirer in 1986, the same year he got his MBA from the Wharton School of the University of Pennsylvania. He went on to work as the Inquirer’s director of circulation, marketing, and strategic planning. And in 1998, Howe became the CEO of Montgomery Newspapers, which he built over the next 11 years into the Philadelphia region’s largest group of suburban newspapers, magazines, and specialty publications.
“I love publishing,” Howe told me in a phone call yesterday. “I love it. I love the business model. But I was appalled when I learned that 70 percent of [daily newspapers’] home delivery subscriptions lapsed every year—and that for a lot of big city newspapers it’s more than 70 percent that lapse every year.”
Howe says he remembers thinking, “There’s got to be a better way to reach people.”
In what Howe calls “a harmonic convergence of people,” they joined forces with Mitri Abou-Rizk, who had led the development of several mobile software applications at the Nokia Research Center in Boston, and Greg Hallinan, who had started his career in strategic marketing at Intel. The business was scattered among them, with Howe in the Philadelphia area and Kenney working first in the Washington D.C. area and later in Encinitas, a coastal suburb about 26 miles north of San Diego.
With Abou-Rizk leading the technology development, the Verve founders created a Web-based platform that enables broadcasters and newspaper publishers of any size to offer news and video that can be accessed by a wide variety of wireless devices.
“Mobile is just hard,” says Greg Hallinan, Verve’s marketing vice president. “There are not just three Internet browsers like you see in desktop computers. There are hundreds of handsets, with dozens of different operating systems and scores of mobile Web browsers.” While Verve’s technology works with older feature phones, Hallinan says users get more user functionality with 3G and better devices. He explains that the technology hosted on Verve’s computer servers can identify the type of mobile device as it connects, and serves local news and ads in a compatible format for that device. Increasingly, though, users are downloading apps that allow them to easily access news from specific media partners.
The Associated Press has been working with Verve since 2008, using Verve’s proprietary publishing platform to support its Mobile News Network. (The Associated Press also is one of Verve’s institutional investors.) The company provides similar support for The San Diego Union-Tribune, The San Francisco Chronicle, The Sacramento Bee, Philly.com, The Miami Herald, and other major metropolitan daily newspapers. Verve’s software as a service also enables media companies to serve targeted advertisements to their readers using mobile devices.
“Mobile content was supposed to be snackable,” says Hallinan. “What we’ve really seen is that it’s not snackable.” Media subscribers “are not reading those long Sunday stories, but they’re consuming multiple content throughout the day.”
If you think about it, this is what people do with their mobile devices. You’ve seen them checking in while they’re waiting in line at coffee shops, restaurants, and theaters.
Today Verve counts more than 750 publishers and broadcasters among its media customers, including newspapers and broadcast stations owned by McClatchey, MediaNews Group, A.H. Belo, Hearst, Belo Corp., and Advance.net. Verve says it also has partnered with many leading mobile device makers, including Apple and Nokia, as well as wireless carriers AT&T, Verizon Wireless, T-Mobile, and Sprint.
“We do not have to work with the handset manufacturers,” Kenney says. “We build mobile applications, mobile websites externally to those companies, and work with our local partners to sell, create, and deliver local mobile advertising.”
Verve generates revenue by charging a minimum fee for customers to use its software as a service platform, Kenney says. Verve’s customers share their revenue from local advertising with Verve, and Verve, in turn, shares some of its national advertising revenue with local customers. Since it was founded in early 2005, the company has raised a total of $12 million in venture capital, including $7 million in a recent round led by BlueRun Ventures.
The company, which recently moved its headquarters into a converted lumber company building in Encinitas, CA, now has about 22 employees, and is looking to expand. About half of Verve’s workforce specialize in software development, and Kenney says the startup hopes to fill eight more technology-based jobs by the end of this year. “In the end,” Kenney says, “we are absolutely a technology software development company.”
Yet to Howe, Verve also represents a lifeline for the industry he loves, as publishers go through a massive re-invention of their business. “It’s sort of like landing a plane in the Hudson River,” Howe says. “It’s pretty ugly going down, but in the end, I think everyone is going to get out alive.”